Big Apple, meet Iron City. The Bank of New York Mellon (BNY Mellon) is the result of the 2007 marriage of Bank of New York and Mellon Financial. It is one of the largest securities servicing companies in the world as well as a leader in asset management and corporate trust and treasury services. BNY Mellon has approximately $26 trillion in assets under custody and administration, and more than $1 trillion of assets under management. Its Pershing unit is a leading securities clearing firm. Subsidiaries BNY Mellon Asset Management and Mellon Capital Management serve institutional investors, while the company's wealth management business courts high-net-worth individuals and families, endowments, and foundations.
Other operations include mutual fund manager Dreyfus, foreign exchange, investment banking, and issuer services related to American Depository Receipts (ADRs). BNY Mellon also has interests in boutique money managers Standish and UK-based Newton.
BNY Mellon says its business model is simple. Basically, it gathers financial assets from corporations, financial institutions, governments, and high-net-worth individuals around the globe, and collects fees by investing, administering, and monitoring them. By cutting loose its retail banking operations over the years, The Bank of New York has eliminated a stable source of interest-related income but apparently feels the tradeoff is worth it. The Mellon deal capped a string of acquisitions through which the company augmented its fee-based operations. The company is now focused on organic growth supplemented by acquisitions.
Its efforts seem to be paying off, as fee-based revenue from both securities servicing and asset management increased in 2010. The company returned to profitability that year after reporting more than $1 billion in losses for 2009, brought on by lower revenue and credit- and investment-related losses. Revenues increased by some 6% in 2011 to $15.3 billion, although net income took a small dip to $2.5 billion. Growth that year was led by growing assets under custody and administration as well as assets under management.
BNY Mellon, which has a presence in more than 35 countries, has been on a steady march of international expansion. It especially has its sights set on the Asia/Pacific region, and specifically China, where it received banking licenses and formed an asset management joint venture in 2010.
Also that year it acquired PNC's Global Investment Servicing business, a provider of custody, fund accounting, transfer agency, and outsourcing solutions for asset managers and financial advisors, for some $2.3 billion in cash, stock, and debt. The acquisition, which doubled BNY Mellon's European asset base, was designed to enhance the company's position supporting fund managers and financial advisors around the world. In early 2012 the company sold the noncore investor services business to Computershare for some $550 million.
The company also arranged to buy out Canadian Imperial Bank of Commerce's 50% stake in Toronto-based trust and custody joint venture CIBC Mellon. BNY Mellon then acquired Canadian wealth management firm I(3) Advisors, adding more than $3 billion in assets under advisement. Also in 2010, BNY Mellon acquired Germany's BHF Asset Servicing from BHF-Bank Aktiengesellschaft in a $330 million transaction. With the deal, BNY Mellon became Germany's second-largest asset servicing provider.
In 2011 BNY Mellon made a US acquisition when it bought Chicago investment manager Talon Asset Management, which has some $800 million in assets. The deal, which gave BNY Mellon's its first office in Chicago, fell in with BNY Mellon's national and international growth strategy. BNY Mellon grew its Pershing business globally with the acquisition of Penson Worldwide's Australian operations in 2011.
In 2010, BNY Mellon sold one of the last remnants of Mellon Financial's banking operations, the Florida-based Mellon United National Bank, to Banco de Sabadell. Mellon had previously sold most of its retail business to Royal Bank of Scotland's US banking arm, Citizens Financial Group, in 2001. – less